Governmental Authority of China side in charge of national development plan and national project
evaluation and domestic approval for project financing and construction.

Street:

38,S. Yuetan Street

Post code:

100824

City:

Beijing

Country:

The People's Republic of China

Telephone:

Fax:

E-mail:

WWW-URL:

Contact person (for this activity):

-------------------------------------

Surname:

First name, middle name:

Job title:

Direct tel:

Direct fax:

Direct E-mail:

Item

Please fill in if applicable

Name of organization(a):

Name of organization (English):

The State Metallurgical Industry Bureau, People's Republic of China

Department:

Acronym:

Acronym (English):

SMIB

Function within activity:

Governmental Authority of China side in charge of sectoral management for state owned metallurgical
industry, including energy conservation renovation.

Street:

46 Dongsi Xidajie

Post code:

100711

City:

Beijing

Country:

The People's Republic of China

Telephone:

Fax:

E-mail:

WWW-URL:

Contact person (for this activity):

-------------------------------------

Surname:

First name, middle name:

Job title:

Direct tel:

Direct fax:

Direct E-mail:

Item

Please fill in if applicable

Name of organization(a):

Name of organization (English):

Planning Committee of Liaoning Province, People’s Republic of China

Department:

Acronym:

Acronym (English):

PCLP

Function within activity:

Provincial governmental authority of Liaoning Province of China side in charge of provincial
development plan and provincial project evaluation and domestic approval for project financing and
construction.

The objective of the Project is to contribute to efficient use of energy and consequently the
protection of the local environment in Liaoyang, P.R.China as well as the reduction of
CO2 emission, by installing furnace cover, CO gas recovery system, and a palletizing
plant into existing electric furnaces at Liaoyang Ferroalloy Works and disseminating the technology
in P.R.China.

Type of project :

Energy efficiency

Location (exact, e.g. city, region, State):

No.21 Zhenxing Road, Liaoyang Liaoning, 111004, P.R. China

Activity starting date:

September 1998

Expected activity ending date:

March 2021

Stage of activity:

Mutually agreed

Lifetime of activity if different from ending date:

20 Years

Technical data:

Annual production of ferro-chromium at Liaoyang Ferroalloy Works is around 38,300 ton/year.

After implementing the project:

Unit electricity consumption of the furnace is expected to be reduced by 132 kWh/ton-FeCr.

Unit coke consumption is expected to be reduced by 49kg/ton-FeCr.

The waste CO will be recovered as fuel at the net rate of 471 Nm3-CO/ton-FeCr, which
will replace boiler fuel equivalent to 6,945 ton-coal/year.

*: of which cost invested by Japanese side is 1,333,000 US$, while 7,290,000 US$ by Chinese side,

**: For this AIJ project as energy conservation retrofitting, it is hard to distinguish which component is
AIJ specific one, since all components are necessary in contributing to the energy saving benefits
eventually.

***: It is defined here as life cycle averaged annual incremental cost for CO2 emission
reduction against the baseline, see Table 1 in detail in Attachment.

5) Mutually agreed assessment procedures:

Describe the procedures, including name of organizations involveda):

Basic Agreement concerning the execution of this project was concluded between NEDO and SDPC, SMIB
and PCLP on September 3, 1998.

NEDO concluded with NKK Co. to trust the execution of Japanese scope of this project in December 4,
1998.

NKK Co. and LFG concluded the Execution Document (ED) in which concrete specification, detail work
assignment, etc. concerning this project was clearly specified in September 16, 1998, and started
the design and engineering work of the project.

As determined in ED, LFG shall have responsibility to record and provide technical and economic
data, which will be necessary for calculation of the CO2 emission level both for
baseline and the AIJ project and for calculation of the emission reduction cost. Such data shall
cover, for example, unit electricity consumption, unit coke consumption and total amount of
recovery furnace gas, etc., as well as other investment and operation cost data for the subsequent
reporting period.

LFG and NKK shall submit the report on the data listed as above to MOST and NEDO before and after
completion of the test run for review.

Based on the data available, ITEESA, Tsinghua University shall make feasibility study on the
eligibility of the AIJ project and on assessment of the environmental benefits relating to the
CO2 emission reduction, as well as on the methodological issues in close co-operation
with LFG and NKK experts, with a view of preparing study report and draft report in uniform
reporting format, to be submitted to both governments.

Bearing in mind that all activities implemented jointly under this pilot phase require prior acceptance,
approval or endorsement by the Governments of the Parties participating in these activities, which shall be
shown as follows:

a. In the case of joint reporting, the report is submitted by the designated national authority of one
participating Party with the concurrence of all other participating Parties as evidenced by attached
letters issued by the relevant national authorities;

b. In the case of separate reporting, the reports are submitted separately by the designated national
authority of each and every participating Party. Information will only be compiled once reports have been
received from all participating Parties.

1) For the activity:

This report is the first report covering the activities at AIJ project feasibility study and AIJ project
design stage, and copies of letters of endorsement by each designated national authority of Parties are
attached.

Describe:

MOST and NEDO concluded the "Memorandum of Understanding on Cooperation in the Model Project
for Energy Conservation in Electric Furnace Used for Ferro-Alloy Refining as a project of AIJ under
the pilot phase"on September 25, 1998.

The Ministry of International Trade and Industry of Japan (MITI) approved this project as Activity
Implemented Jointly - Japan Program on June 17, 1998.

(MITI) The Japanese government confirmed this project as Activity Implemented Jointly (AIJ) under
pilot phase on June 23,1999.

MOST authorized by Chinese government, confirmed this project as Activity Implemented Jointly (AIJ)
under pilot phase on July 9,1999.

2) This report is a joint report:

Yes, forward copy of agreement/endorsement by the designated national authorities involved

No, this is a separate report. The reports are submitted separately by the designated national
authority of each and every participating party.

3)General short comment by the government(s) if applicable:

This is the first project report. The system boundary design and technical basic data were preliminary
checked among the Chinese and Japanese experts. The environmental benefits and methodological and technical
issues were addressed on the project specific basis. On the other hand, duetoinsufficient data availability andlackofuniformedmethodology
guide-lines the results reported here may be subject to modification. Hopefully with the further
progress of the project activities, more monitoring information on emissions and experiences in
methodologies will be built up, and therefore the subsequent reports could be updated later on.

C. Compatibility with and supportiveness of national economic development and socio-economic and
environment priorities and strategies

Describe (to the extent possible) how the activity is compatible with and supportive of national
economic development and socio-economic and environment priorities and strategies

As energy supply and demand issues and protection of the global environment have become the focus
of worldwide interest, NEDO is promoting energy conservation model projects in Asian countries
including China, to contribute to the effective use of energy and improvement of environmental
pollution.

In China, strong national policies for energy conservation and environmental protection have been
set, and relating regulations and laws have come into effect. The energy intensive metallurgical
industry in China has been listed as focused sector for energy conservation.

As an AIJ cooperation between Japan and China, this project will contribute to efficient use of
energy and consequent protection of the local environment in China as well as CO2
emission mitigation by adopting advanced technology and equipment provided by Japan in the
Ferro-Alloy Refinery Works in the sector. Therefore the AIJ activity is compatible with and
supportive of national economic development and socio-economic environment priorities and
strategies.

D. Benefits derived from the activities implemented jointly project

Whenever possible, quantitative information should be provided. Failing that, a qualitative description
should be given. If quantitative information becomes available, it could be submitted using the update(s).
(If the amount of quantitative information is too large, the source could be indicated.)

Item

Please fill in

Describe environmental benefits in detail:

Electric power and consumption of cokes and electrode consumption will be reduced and waste CO will
be recovered by implementing the project. Accordingly,

CO2 emission associated with power generation, coke and CO combustion will be
reduced.

SO2 emission associated with power generation and production of cokes will be
reduced.

As recovery system equipped with series of Venturi scrubbers will be installed to remove most
of the dust contained in the gas, therefore, the dust emission will be dramatically reduced.

Do quantitative data exist for evaluation of environmental benefits?

Yes, CO2 emission reduction is estimated as 29,050 ton-CO2/year.

Describe social/cultural benefits in detail:

Project management method

Management of pelletizing plant operation including pellet size control

Operating of CO gas recovery system

Increase in job opportunity for pelletizing plant

Do quantitative data exist for evaluation of social benefits?

No

Describe economic benefits in detail:

Cost in electric power consumption will be reduced.

Cost in coke consumption will be reduced by less coke/Fe ratio, when pellets ore are used.

Raw material cost can be reduced by utilizing pellets which is made from the cheaper fine
chromium ore, instead of expensive bulk ore.

CO gas will be recovered from the electric furnace as fuel used in steam boiler to generate
heat replacing those for TiO production process and space heating in winter that are currently
purchased from thermal power utility.

Do quantitative data exist for evaluation of economic benefits?

Yes

E. Calculation of the contribution of activities implemented jointly projects that bring about real,
measurable and long-term environmental benefits related to the mitigation of climate change that would not
have occurred in the absence of such activities.

Estimated emissions without the activity (project baseline):

Description of the baseline or reference scenario, including methodologies applied:

System Boundary:

This AIJ project is a technical retrofit project. So the CO2 emission baseline is the current
emission level based on the existing operation condition in Liaoyang Ferroalloy Refinery Works Group in
absence of the AIJ project. According to the project specific baseline approach, the system boundary design
for the AIJ project will be illustrated as in the Fig. 1.

The direct emission levels from major processes both in baseline case and the AIJ project are covered
within the system boundary. The major processes relating to the energy conservation retrofitting in the AIJ
project are following:

Installing a Fe-Cr ore-palletizing facility which will result in coke and electricity saving in the
refinery process;

Installing a furnace cover system by which waste carbon monoxide (CO) gas emissions will be recovered
in the refinery process;

Recovered CO will be used as fuel in an industrial boiler to generate steam for industrial heating,
which, otherwise, would be purchased from a local coal fired co-generation power plant;

Meanwhile, additional electricity, steam and recovered CO will be used in the Fe-Cr ore-palletizing
process and in the CO recovery process, which will result in less net emission reduction somehow.

Therefore, the technical and economic parameters, including energy efficiency and CO2 emission
rate for both baseline case and the AIJ project could be identified as shown in the Fig.1 as following:
(obtained from the LFG and the project proposal – submitted by Anshan Metallurgical Design and
Research Institute, and NKK/Japan)

Figure 1:System boundary of the AIJ project in Liaoyang Ferroalloy Refinery Works Group

The production capacity: 38,300 ton-FeCr/year (without change between baseline and AIJ),

Unit electricity consumption: for baseline is 3676 kWh/ton-FeCr, for AIJ is
3384kWh/t-FeCr;

Unit coke consumption: for baseline is 526 kg/ton-FeCr, which is in the form of bulk Fe
ore with higher price at 132.9 US$/ton-Fe ore, and

for AIJ is 477kg-Coke/ton-FeCr, which is in the form of powder Fe ore with lower price
at 100.4 US$/ton-Fe ore;

Comparing with AIJ project, more coke is wasted in baseline case at the emission rate of
526-477 = 49 kg/ton-FeCr;

Fixed carbon rate in the coke: 83%

Reaction gas emission rate: for baseline is 711 m3/ton-FeCr, and for AIJ is
635 m3/ton-FeCr in which the content of CO2 and CO are 7.57% and
84.48% respectively; Comparing with AIJ project, more gas is released in baseline case at the
emission rate of 711-635 = 76 m3/ton-FeCr which mainly consists of CO2
emitted by those waste coke that are not involved in the oxygenating reduction reaction with Fe ore
and eventually burnt into the air in the form of CO2;

The effective thermal value of the recovered reaction gas emission in AIJ project is 2700
Kcal/Nm3 and converted into 0.385 kgce/Nm3;

Energy efficiency for the coal fired co-generation boiler is 75 %,
150Kgce/ton-steam, and for the gas fired industrial boiler is 80%,141Kgce/ton-steam;

These part of steam purchased from cogeneration utility will be replaced by steam generated
from industrial boiler fueled with recovered CO;

The baseline emission could be calculated based on three processes in baseline case, i.e. the
Ferro-alloy refinery with bulk Fe ore, CO gas generation without recovery and steam generation from
local coal fired co-generation power plant;

1. The CO2 emission from the Ferroalloy refinery works with bulk Fe ore:

In this process, CO2 emission is accrued from energy consumption of the electricity used
in the electric furnace, from coke in its reaction with Fe-Cr ore and from the waste coke which
will be saved otherwise in the AIJ project. So the CO2 emission EF can be
calculated by the following formula:

2. The CO2 emission from the CO generation and burning without recovery:

In this process, CO emission is firstly generated in coke-Fe oxygenating reduction reaction and
mixed with the reaction gas, and then burning without recovery. Similar to CO2 emission
in 1. (2), those reaction gas emission is the same as that in the AIJ project, due to the same
productive reaction process. So the CO2 emission ECO can be calculated as
following:

3. The CO2 emission from steam generation by local coal fired co-generation power
plant

It should be noted that this amount of CO2 emission is accrued from those steam
generation in the local co-generation utility, that will be replaced by net steam output to be
generated by recovered CO in industrial boiler in the AIJ project. Here the net steam output should
be less than gross steam output, due to the part of recovered CO will be used as fuel for heating
in palletizing process, at the rate of 146 m3gas/T-FeCr, and the part of
recovered steam will be used for CO recovery process, at the rate of 28.617
m3/ton FeCr .

(see AIJ project part for detail)

So the CO2 emission from steam generation equivalent to the net output from AIJ project,

The technical and economic parameters, including energy efficiency and CO2 emission rate
for the AIJ project have been listed before. (obtained from the LFG, NKK and the project proposal
– submitted by Anshan Metallurgical Design and Research Institute)

The CO2 emission could be calculated based on three processes in the AIJ project, i.e.
the Fe-Cr ore-palletizing and Ferro-alloy refinery process with palletized Fe-Cr ore, CO gas
recovery and steam generation from recovered CO gas.

In this process, CO2 emission is accrued from energy consumption of the electricity used
in the electric furnace, from coke in its reaction with Fe-Cr ore and from additional electricity
and CO consumption for palletizing process in the AIJ project. So the CO2 emission
EF can be calculated by the following formula:

In this process, CO emission is firstly generated in coke-Fe oxygenating reduction reaction and mixed with
the reaction gas, and then recovered without burning. The CO2 emission will be accrued by
additional electricity and steam consumption for the CO recovery process. So we have

As mentioned in the baseline calculation, this amount of CO2 emission is accrued from net steam
output generated by net recovered CO gas in industrial boiler in the AIJ project. Here the net recovered CO
gas should be the gross recovered CO gas – that for heating in palletizing process, at the rate of
146 m3gas/T-FeCr – that steam equivalent for CO recovery process, at the rate of
28.617 m3/ton FeCr.

So the CO2 emission from the net output of steam generated by net recovered CO gas,

F. Additionally to financial obligations of Parties included in Annex II to the Convention within the
framework of the financial mechanism as well as to current official development assistance flows

Please indicate all sources of project funding a) .

Category of funding

(For each source one line)

Amount

(US dollars)

Subsidy for improving international energy use (Japanese national budget, which is sponsored by
MITI). The funds are additional to Japanese GEF and current ODA budget.

9,942,000 US$ (1997FY-1998FY)

4,663,000US$ (1999FY-2000FY)

1US$ = 120 Japanese Yuan

a) Only refer to all those sources that were funded by MITI/Japan as Annex II country Party to the UNFCCC.

G. Contribution to capacity building, transfer of environmentally sound technologies and know-how to
other Parties, particularly developing country Parties, to enable them to implement the provisions of the
Convention. In this process, the developed country Parties shall support the development and enhancement of
endogenous capacities and technologies of developing country Parties

Transfer of environmentally sound technologies and know-how

Describe briefly

Transfer of energy efficient electric furnace equipment and pelletizing plant as well as their
know-how technology for Ferroalloy refinery in the Liaoyang Ferroalloy Works Group

By implementing the project, following capacity building can be attained:

Project management

Operation of the pelletizing plant

Operation of CO gas recovery system

H. Additional comments, if any, including any practical experience gained or technical difficulties,
effects, impacts or other obstacles encountered

Fill in as appropriate:

1) Any practical experience gained:

Since the Project is a Model Project, dissemination activity of the technology through demonstration
operation is planned in the final stage of overall project schedule. A large effect of energy conservation
and environmental improvement is expected through dissemination of the technology in the future

2) Technical difficulties:

Meanwhile the technical difficulties in determining the system boundary are encountered.

3) Negative impacts and/or effects encountered:

4) Other obstacles encountered:

5) Other:

Suggestion: Personnel training

(1) The key staff member of the plant will be educated to enhance their public awareness on the
CO2 emission mitigation, climate change and AIJ pilot phase under UNFCCC.

(2) The professional training will be done for the technical engineers and workers who will be
involved in the monitoring tasks.

The training course could be given three months in advance of the plant’s putting into
operation.

The technical and economic parameters, including energy efficiency and CO2 emission rate
for the AIJ project have been listed before. (obtained from the LFG, NKK and the project proposal
– submitted by Anshan Metallurgical Design and Research Institute)

The CO2 emission could be calculated based on three processes in the AIJ project, i.e.
the Fe-Cr ore-palletizing and Ferro-alloy refinery process with palletized Fe-Cr ore, CO gas
recovery and steam generation from recovered CO gas.

In this process, CO2 emission is accrued from energy consumption of the electricity used
in the electric furnace, from coke in its reaction with Fe-Cr ore and from additional electricity
and CO consumption for palletizing process in the AIJ project. So the CO2 emission
EF can be calculated by the following formula:

In this process, CO emission is firstly generated in coke-Fe oxygenating reduction reaction and mixed with
the reaction gas, and then recovered without burning. The CO2 emission will be accrued by
additional electricity and steam consumption for the CO recovery process. So we have